EXCLUSIVE: Eskom director embroiled in potential conflict of interest in multi-billion contract

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Ayanda Mdluli

JOHANNESBURG- Recently appointed Eskom board member Sifiso Dabengwa may find himself in a potential conflict of interest after it surfaced that he was a non-executive director of tech giant Gijima when it submitted the request for proposals for a series of ICT contracts at Eskom with an estimated value of more than R2 billion.

At the beginning of this year, Dabengwa was appointed as a member of the board at the embattled power utility and concerns have been raised after the ICT contracts at Eskom were halted pending an internal investigation after allegations of kickbacks were leveled against some of the company’s senior employees.

Eskom has since confirmed that it is investigating the tender on the back of allegations of impropriety from a procurement process and “governance perspective”.

Africa News 24-7 understands that several employees at the power utility have since been suspended, while Jay Pillay, the chief of procurement at Eskom has been served with a precautionary notice.

A well-placed source and senior official at Eskom who cannot be identified for fear of victimization said there could be a potential conflict of interest on Dabengwa’s part because when Gijima submitted the request for proposal for the contracts when the tender was advertised, he was still a non-executive director in the company and could have known that he was in the running to become a member of the board at Eskom when President Cyril Ramaphosa announced changes to the Eskom board in January.

An ethical conundrum

According to the senior official: “There is no way that there cannot be a potential conflict of interest especially when there is so much money involved in all of these lucrative contracts. Even though it’s not illegal, the practice of recycling the same faces to boards in SA’s corporate landscape is in itself a hindrance to corporate governance. The ethics are highly debatable and I find it very hypocritical for one to claim to be advocates of good corporate governance principals yet it’s the same people who are passed around in the board of directors and who have links to companies that are in the running to score billions. These people know very well that they are conflicted as it is impossible to be oblivious to the lucrative contracts that are constantly awarded to the same companies and the same people. When these contracts go out to tender you cannot deny who has influence on who gets what and where,” explained the source.

Dabengwa, former MTN chief executive, was appointed as a non-executive director of both Gijima Holdings and Gijima Group on the first of April 2016. Both companies are part of the Guma Group where businessman Robert Gumede sits as the executive chairman. According to documents furnished to Africa News 24-7 by the company, Dabengwa’s resignation was effective from 31 January 2018.

Dabengwa is currently a board member of Eskom and was appointed as part of the new Eskom Board with effect from 22 January 2018. In an answer to questions, the company says when Dabengwa was appointed as director of Eskom’s board in January 2018, he informed the company and requested a conflict check regarding any Eskom business with Gijima. This is despite the fact that Gijima had already submitted the request for proposal documents to Eskom for ICT contracts worth close to R2 billion in November 2017.

According to Gijima: “Mr. Dabengwa resigned from the Gijima boards to avoid any conflict of interest when he learned from Gijima that it is already doing business with Eskom. It must be noted that there is nothing that prohibits Mr. Dabengwa or any board member from being a board member of Eskom simultaneously with an appointment to the board of Gijima or any other company provided that the director in question, being a responsible person, declares a conflict, if any, to his fellow board members and recuses himself whenever a matter is being adjudicated by the board or relevant committees.”

Eskom Responds

In an emailed statement, Eskom said Dabengwa had disclosed his board membership at Gijima as part of his declaration of interests submitted for probity checks at the start of the board’s term in January 2018.

Explaining the scenario, the power utility said: “There would only be a conflict in the event that Dabengwa was party to a discussion or decision relating to Gijima in his capacity as an Eskom Board member. All interests of board members are subject to a probity check where members who have interests in companies that are potential suppliers to Eskom are flagged. At every board meeting or decision of the board, members are required to declare their interests again in relation to specific items on the agenda or any matters for approval and would have to recuse themselves should there be any potential conflicts.”

According to Eskom, just because Dabengwa was a member of the board of Gijima at the time of his appointment onto the Eskom board does not in itself give rise to a conflict of interest. The state-owned company suggested that a conflict of interest would only have arisen in the event where Dabengwa was involved in a board decision or deliberation involving Gijima.

Referring to the specific ICT contract, Eskom said a submission was made to the board to obtain authority to negotiate with potential suppliers who had submitted responses under this tender, of which Gijima was one such supplier. Dabengwa is said to have abstained from participating as a result of a perceived conflict in deliberating on ICT services.

“It must be noted that at this time he had already resigned from the board of Gijima but saw it prudent to still recuse himself. We believe this speaks to the seriousness with which the new board and its members take good governance practices. The said tender was still at negotiation phase by the executive and as such, the board decision was purely to grant management authority to continue negotiations and is still subject to further internal approvals, including final Board approval of preferred suppliers,” said the company.

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